LVB plans Rs 98 cr rights issue

Tamil Nadu-based Lakshmi Vilas Bank (LVB) plans to raise Rs 98.36 crore through a rights issue of equity shares to take its networth beyond the minimum Rs 300 crore prescribed by the Reserve Bank of India (RBI).

The private sector bank will issue 1.96 crore equity shares of Rs 10 each to existing shareholders at a premium of Rs 40 per share. The ratio of rights shares in 1:1.

LVB's networth after the rights issue will increase to Rs 389.41 crore from Rs 291.04 crore now and Rs 229.99 crore at the end of March 2006.

The bank is also issuing bonus shares in the ratio of one bonus share for the two existing shares. However, the bonus shares are not entitled for the rights share.

The bank's capital adequacy ratio as on March 31, 2006 was 10.79 per cent, as against the RBI stipulation of 9 per cent. The shares of LVB today closed 8.88 per cent up at Rs 121.35 per share on the National Stock Exchange. The book value of LVB shares is Rs 149 per share.

The bank may use a portion of the issue proceeds to fund expansion of branch network, other distribution channels and technological upgradation of branches, LVB said in its draft prospectus filed with the Securities and Exchange Board of India.

In terms of overall size, the total assets of the bank increased from Rs 4,053.38 crore in March 2005 to Rs 4,919.38 crore as on March 31, 2006.

The deposits grew by 24.04 per cent to Rs 4,336.38 crore at the end of March 2006 from Rs 3,495.93 crore in 2004-05. The bank's advances grew from Rs 2,317.71 crore to Rs 2,952.82 crore, registering a growth of 27.40 per cent.

The net non-performing assets of LVB decreased to 1.89 per cent as on March 31, 2006, from 4.98 per cent a year ago. The capital adequacy ratio has marginally reduced to 10.79 from 11.32 per cent as on March 31, 2005because of higher credit growth.